Budget Change may cripple multi-year transportation contract.
Press Release Summary:
In letter which commended President Obama for his expressed support for significant increased investment in transportation infrastructure, 8 major transportation and construction organizations also warned that eliminating multi-year contract authority would undermine financing mechanisms for transportation. Predictability that contract authority provides is essential for states and local governments to make long term commitments to major transportation investment projects.
Original Press Release:
Budget Change Could Cripple Multi-Year Transportation Contracting Leaders Warn
In a letter this week which commended President Barak Obama for his "expressed
support for significant increased investment in transportation infrastructure," eight major transportation and construction organizations also warned the President that a proposal contained in the Administration's budget request to eliminate multi-year contract authority, "would undermine the very fabric of the financing mechanisms" for transportation at the very time that the nation is looking to transportation investments to help rebuild the economy.
Contract authority is a little-known budget keeping mechanism which allows states to
plan and execute projects that take several years for completion. It is based upon the fact that transportation programs are funded by dedicated user fees, such as the motor fuel tax, rather than by annual appropriations. The contract authority solution for multi-year capital investment was first enacted in 1956 for highways and later extended to transit and aviation.
In a letter to President Barack Obama, the transportation leaders state, "The predictability that contract authority provides is essential for states and local governments to make long term commitments to major transportation investment projects. In 1998 with the passage of the TEA 21 legislation, Congress recognized this unique budget situation and established funding guarantees tied to the trust funds."
However, the budget outline released by the Obama Administration proposes to eliminate
contract authority, for the purposes of greater transparency in budgeting. The organizations state, "By subjecting long term transportation investment to the vagaries of the annual appropriations process, the proposed scorekeeping change strikes at the heart of the job creation goals you have set for these programs by undermining the ability to make multi-year commitments."
Signing the letter were the following organizations: AASHTO; the Associated General
Contractors of America; the American Highway Users Alliance; the American Road and
Transportation Builders Association; the American Trucking Associations; the National
Asphalt Pavement Association; the National Stone, Sand and Gravel Association; and the
U.S. Chamber of Commerce.
Fourteen transportation committee leaders in Congress also wrote to the President last
week to oppose the budget change.
Copies of the letters can be found at
http://downloads.transportation.org/ContractAuthorityLetter.pdf and
http://transportation.house.gov/News/PRArticle.aspx?NewsID=842.
